Chicago’s Pritzker Group buys San Antonio’s C.H. Guenther & Son

C.H. Guenther and Son Inc., the parent company of the Pioneer Flour Mills and the Guenther House restaurant, has been sold to PPC Partners, which Chicago-based private equity firm Pritzker Group formed on Monday. less

C.H. Guenther and Son Inc., the parent company of the Pioneer Flour Mills and the Guenther House restaurant, has been sold to PPC Partners, which Chicago-based private equity firm Pritzker Group formed on ... more

Photo: Bob Owen /San Antonio Express-News

Photo: Bob Owen /San Antonio Express-News

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C.H. Guenther and Son Inc., the parent company of the Pioneer Flour Mills and the Guenther House restaurant, has been sold to PPC Partners, which Chicago-based private equity firm Pritzker Group formed on Monday. less

C.H. Guenther and Son Inc., the parent company of the Pioneer Flour Mills and the Guenther House restaurant, has been sold to PPC Partners, which Chicago-based private equity firm Pritzker Group formed on ... more

Photo: Bob Owen /San Antonio Express-News

Chicago’s Pritzker Group buys San Antonio’s C.H. Guenther & Son

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San Antonio-based C.H. Guenther & Son Inc., parent company of the Pioneer Flour Mills as well as the Guenther House restaurant and museum, has been sold to Chicago private equity firm Pritzker Group.

Terms of the deal, which closed last week, have not been publicly disclosed. A shareholder who voted on the sale last month, however, said the transaction was valued at as much as $1.4 billion.

Pritzker Group formed PPC Partners on Monday to buy Guenther and other “middle-market companies.” The deal ends 166 years of family ownership at Guenther, which has become a fixture in the King William Historic District and is one of San Antonio’s oldest companies.

PPC is headed by Anthony “Tony” Pritzker, an heir to the Hyatt fortune and includes former officials of Pritzker Group Private Capital.

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J.B. Pritzker declined to answer questions about his financial holdings in the Bahamas on March 7, 2018, in Urbana-Champaign. (Chicago Tribune)

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Guenther had been Texas’ oldest continuously owned family business, founded in 1851 by German immigrant Carl Hilmar “C.H.” Guenther. The company produces a variety of dry and frozen-grain food products — including flour, sauces, gravies, frozen doughs and baked goods — for retail and the food-services industry under such labels as Pioneer, White Wings, Sun-Bird and Morrison.

The company’s 20-story grain tower, built in 1922, remains a landmark south of downtown San Antonio. The nearby Guenther House, once the family’s home, is a popular restaurant and museum where the company showcases its products.

“For over 166 years, C.H. Guenther has provided innovative products with excellent customer service to leading global customers,” Dale Tremblay, the company’s CEO, said in a statement today. “We are delighted to partner with a group like PPC Partners that shares our values and commitment to employees, customers and suppliers.”

Guenther’s headquarters will remain in San Antonio.

Shareholders voted last month to sell the company after about two years of discussions with Pritzker Group, the shareholder said. There were about 95,000 Guenther shares outstanding, and the sale was for $9,250 for each share they owned, the shareholder added.

The purchase price also includes debt. Bexar County records show a revolving credit agreement Guenther has with a group of lenders led by JPMorgan Chase Bank is for up to $450 million and matures in June 2022.

Guenther “is a clear market leader with an outstanding management team,” PPC Partners Chairman and CEO Tony Pritzker said in a statement. “Combining our flexible capital base and industry knowledge with this management team will enable the company to generate new opportunities for growth.”

While the Guenther name remains closely associated with San Antonio, the company has far-flung operations. It has bakeries in Belgium and the U.K.’s Lancashire, a pastry business in Vancouver, frozen-food production facilities in Dallas and South Carolina, and plants in Kansas City, Portland, Oregon, Schenectady, New York, that produce pizza dough mixes. Guenther had about 2,600 employees as last summer.

The closely held company generated $42 million in net income on almost $800 million in sales in its fiscal year 2017, the shareholder said. It marked the second best year in the company’s history but fell below expectations, Tremblay wrote to shareholders in a July letter obtained by the San Antonio Express-News.

Guenther’s European and Canadian businesses performed “exceptionally well” but the company had “challenges” in its U.S. operations. Its San Antonio and Kansas City plants, in particular, did not perform as well as anticipated, Tremblay said in the letter.

“We were again growth challenged, and with softness in many key businesses, but in this case Foodservice was our biggest challenge,” Tremblay wrote. “We did not lose any key customers this year, but almost every single customer was down versus prior year. As such, it was obvious we did not add enough new customers to offset these key customer issues.”

The company’s customers include McDonald’s, the corporate parent of Carl’s Jr. and Hardee’s, and Costco. The San Antonio Express-News reported in 2005 that Guenther worked with McDonald’s for more than three years to develop the McGriddle breakfast sandwich.

Last summer, Guenther completed the biggest acquisition in its history, buying Montreal-based frozen-food company Plats du Chef from Claridge Inc. The transaction amount was not disclosed.

Guenther appears to be an enterprise right up Pritzker Group’s alley. The private equity firm says on its website that it focuses on acquisitions in three core sectors: services, health care and manufactured products — which includes food.

None of PPC Partners companies listed on its website is a household name. The companies are: Entact, a provider of environmental remediation and geotechnical construction; Entertainment Cruises, a maritime dining cruise company; and LBP Manufacturing, a maker of consumer packaging.